Shell is set to reduce its workforce by hundreds within its oil and gas exploration operations as part of a broader cost-cutting strategy under the leadership of CEO Wael Sawan. This move is aligned with Shell's objective to slash up to $3 billion in expenses by the end of 2025.
The job cuts will impact approximately 20% of the workforce in two key subdivisions of Shell’s upstream division, which is responsible for the company’s exploration strategy and the development of its oil and gas discoveries. The reductions are expected to hit global offices, with the majority of job losses anticipated in Houston, Texas, and The Hague, Netherlands, while UK operations will see a lesser impact.
A Shell spokesperson stated, “Shell aims to create more value with less emissions by focusing on performance, discipline, and simplification across the business.” The spokesperson emphasized that the company is committed to achieving structural operating cost reductions of $2 billion to $3 billion by the end of 2025, which was first announced during the Capital Markets Day event in June 2023. This will involve "portfolio high grading, new efficiencies, and a leaner overall organization."
The affected operations are part of Shell's upstream division, which accounted for more than a third of the company’s $28 billion in adjusted profits last year. The upstream segment is crucial to Shell’s core business, as it oversees the extraction of oil and gas resources, a significant contributor to the company's overall profitability. Since taking over as CEO in September 2022, Wael Sawan has implemented significant changes to the company’s strategic direction. He reversed previous plans to reduce oil production and has instead focused on increasing efficiency and profitability through cost-cutting measures. Under his leadership, Shell has already seen substantial restructuring, including job cuts in various sectors such as chemicals, wind energy, and centralized functions like legal and communications.
In October, Shell also made cuts to its low-carbon solutions division, signaling a shift in focus toward maximizing returns from its traditional oil and gas operations. Earlier this month, Sawan reported that Shell had already achieved $1.7 billion in cost savings and would continue efforts to "simplify the way the organization works." The latest round of job cuts is part of Shell's ongoing efforts to streamline its operations and increase profitability in a challenging energy market. As the company continues to adapt to a rapidly changing global energy landscape, these cost-cutting measures are likely to play a central role in its strategy moving forward.